What is Zero Balance Current Account & How to Open Online?

If you are planning to open a current account for yourself or your business, you can choose a zero balance current account. A zero balance current account will not require you to maintain a minimum balance per month/quarter, thereby reducing your financial burden. Read on to find out more details about: 

• Types of a zero balance current account
• How do you open a zero balance current account?
• Documents required to open a zero balance current account
• Which banks offer a zero balance current account?  

What is a Zero Balance Current Account?  

A zero balance current account is a type of current account that does not have a minimum balance that the account holder must keep. In contrast to traditional current accounts, where account holders must maintain a particular amount to avoid fines, a zero balance current account provides freedom by enabling companies to handle their activities without worrying about minimum balance restrictions.

A zero-balance current account offers all the advantages of a standard current account with more flexibility. Startups, small businesses, freelancers, and entrepreneurs who wish to maintain effective financial transactions while lowering their banking expenses may find this kind of account helpful. 

Features of Zero Balance Current Account  

A zero balance current account comes with various features that make it an attractive choice. Some key features include:  

• Zero balance current account holders are exempt from maintaining a minimum balance; thus, they need not worry about fines for low balances.
• Banks offer free online banking, mobile banking, and UPI payment services for zero balance current accounts. 
• They are ideal for businesses and individuals to operate huge financial transactions with zero monthly account balances. 
• Free business debit cards, chequebooks and demand drafts are given to account holders to aid with transactions and payments. 
• Several banking methods, including NEFT (National Electronic Funds Transfer), RTGS (Real-Time Gross Settlement) and IMPS (Immediate Payment Service), allow account holders to transfer money swiftly. 
• Certain banks provide an overdraft facility for current accounts with zero balances, enabling account holders to withdraw more money than they have available within a certain limit. 

Types of Zero Balance Current Accounts  

Banks offer different types of zero balance current accounts, depending on the needs of the individual and business. Here are the types of zero balance current accounts:

• Startup Accounts: These accounts are designed for new businesses. Since they do not require to maintain any account balance, they can operate without worrying about finances. These accounts may offer simplified features and lower fees. 
• Retail/ Wholesale Accounts: These accounts are suited for retailers or wholesalers and feature features like bulk payment processing. They can maintain this account to deal in huge transactions without having to pay a balance.
• Corporate Accounts: These accounts are designed for larger companies and offer features like multiple account access and advanced cash management at zero balance. 
• General Current Accounts: These are standard current accounts that can be opened by companies, trusts, consultants, businesses, etc. They may be suitable for a variety of business or proprietor needs while providing the convenience of maintaining a zero balance.

How to Open Zero Balance Current Account Online?  

Most banks allow customers zero balance current account opening online by following the below given process:  

• Go to the official website of the preferred bank.
• Choose the ‘Zero Balance Current Account’ from the available current account options and click ‘Apply Now’.
• Provide details such as business name, address, and type of business.
• Submit scanned copies of all the required documents, like business documents, identity proof, and address proof.
• Some banks perform a video KYC or know your customer check to authenticate.
• Once approved, you will receive account details by email or SMS.

How to Open Zero Balance Current Account Offline?  

If you prefer opening a zero balance current account opening offline, follow the below process:  

• Go to the nearest branch of the selected bank.
• Ask for the zero balance current account opening form and fill in all the details needed.
• Attach the appropriate supporting documents, such as copy of identity proof, address proof, and business registration documents.
• The bank verifies your details and may conduct in-person verification if necessary.
• Upon approval, you will receive your account opening kit, which includes the chequebook, debit card, and account form.

Documents Required for Opening Zero Balance Current Account  

It is important to note that the documents required for opening a zero balance current account online may vary depending on the bank and the type of account chosen. Below is a general list of commonly required documents:

Proof of Identity (Any one of the following):

• PAN card
• Voter ID card
• Passport
• Driving license
• Aadhaar card

Proof of Address (Any one of the following):

• Utility bills (Electricity, Water, Telephone)
• Rent agreement
• Bank statement
• Ration card
• Passport
• Driving license

Passport Size Photograph

• A recent passport-size photograph and the application form

Additional Documents Based on Business Type

Different types of businesses require additional documentation for account opening. Below are the specific documents needed based on the business entity:

• For Sole Proprietors
  • Certification issued by Sales Tax or Service Tax authorities
  • Proprietorship registration letter
• For Partnership Firms:
  • Registered Partnership Deed
• For Private & Public Limited Companies:
  • Certificate of Incorporation issued by the Registrar of Companies
  • Memorandum and Articles of Association (MOA & AOA)
• For Trusts:
  • Trust Deed
  • Registration Certificate
  • Resolution passed by the Board of Trustees
• For Hindu Undivided Family (HUF):
  • Official HUF declaration letter signed by the Karta and all coparceners

Since specific requirements may differ from one financial institution to another, it is advisable to check with the respective bank before proceeding with the application.

Which Bank is Best for Zero Balance Current Account?  

Generally, a zero-balance current account entails certain conditions or is for certain classes of business (like startups and companies). Therefore, the best zero-balance current accounts depend quite a bit on your specific business needs. However, here is a general overview of banks offering zero balance current accounts:

Axis Bank

• ‘Delite Current Account’ of Axis Bank features no monthly average balance requirement.
• This account also has nil monthly service charges.
• It is best suited for sole proprietors, companies and firms.     

IndusInd Bank

• IndusInd Bank offers the ‘Merchant Plus Basic Account’, which offers zero balance feature.   
• This account can be opened digitally and paperless.
• It provides free cash deposits up to Rs. 3 lakh at the base location.

ICICI Bank

• ICICI Bank offers various zero balance current accounts, which are as follows:
  • Business 360° Banking
  • iStartup Tech
  • Business Banking Elite
  • Business Banking Gold
  • Business Banking Platinum
  • Business Banking Silver
  • Repriced Current Account (REPCA)
  • Collection Current Account
  • GEM Current Account
• These accounts are suited for businesses, startups, government suppliers, vendors and contractors.
• They offer additional benefits, such as nil charges for electronic transfers and cash deposits.

HDFC Bank

• HDFC Bank offers an ‘Institutional Current Account’ with zero balance features.
• This account can be opened by trusts, associates, societies, clubs, non-profit organisations and government organisations.
• It offers various features, such as bulk payments to vendors and salary payments to employees, bulk cheque or demand draft printing, faster inter-city cheque collections, Forex services, etc.

Punjab National Bank (PNB)

• PNB offers a PNB Expert Current account, which is a zero balance current account.
• It is suitable for chartered accountants, company secretaries, doctors and other medical professionals, architects, lawyers, cost accountants, valuers, interior designers and fashion designers.
• It offers free cash deposits and withdrawals up to Rs. 1 lakh per day.
• It provides a RuPay Platinum Debit Card and a RuPay Select Debit Card.

Benefits of Zero Balance Current Account  

Zero balance current account provides multiple advantages for businesses and entrepreneurs, which are as follows:

• For micro and small enterprises in the initial stages of growth, cash strain may become an issue, making it not feasible for them to keep a certain minimum account balance. A zero balance current account enables them to conduct transactions without the burden of keeping a fixed amount.
• Freelancers and consultants often find it hard to keep permanent balance accounts. A zero-balance account allows them to manage their accounts properly without worrying about maintaining a minimum balance.
• They could be helpful to startups and small businesses with fluctuating cash flows by eliminating the worry of penalties for low balances. 
• The traditional current bank accounts impose fines if the balances go below a certain limit. Zero balance savings accounts eliminate fines, reducing bank-related costs for the firms. 
• The zero balance current account facilitates online banking, allowing a business to make payments, check statements, and manage funds from the internet. 
• Several banks offer business-friendly services for zero balance current account, such as bulk payments, invoicing tools, and integration with payment gateways, improving efficiency and making the account more than just a banking tool but a full business banking solution.
• Due to the better chance of getting loans, overdraft facilities, and business credit cards, a zero balance current account with a bank is sure to be beneficial. 

Disadvantages of Zero Balance Current Account  

Though a zero-balance current account can provide flexibility and convenience, it does also have disadvantages. Below are the key disadvantages:  

• A zero-balance current account does not attract any interest on the amount deposited with the bank.  
• Many banks allow free transactions up to a specific limit. Any transactions that may exceed that limit may incur charges. For businesses with several transactions, such charges can add up over time, thus increasing banking costs.  
• Zero balance current accounts often come with cash withdrawal and deposit restrictions per month. It can become a challenge to businesses if they exceed their limits.  
• Businesses requiring services like cheque deposit or cash withdrawal that are large in amounts may find it inconvenient where the zero balance current accounts offers wholly online and mobile banking channels. 
• Zero balance current accounts do not earn any interest on deposited funds; they are generally not meant for money to be held for extended periods of time. 

A zero balance current account is very convenient for business owners, startups, and freelancers who cannot maintain minimum account balance. No minimum balance and flexible transaction options make it easier to manage business finances. 

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3. Best Zero Balance Account Opening in India